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The American Revolution Essay

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Prior to the American Revolution, each of the colonies had its own form of currency that was used to settle financial transactions. During the Revolutionary War, the Congress began issuing large amounts of paper money, known as Continentals, which would be redeemed for gold and silver after the war ended. The states also began to issue their own paper currencies, and since these issuances were not regulated, paper money soon became nearly worthless. When the war ended, the individual states continued to control and regulate their own currencies, using mostly coins from Portugal, Spain, France and England. However, there was no consistency among the states in exchange rates for these foreign coins, which made it difficult to carry out transactions. The creation of the dollar as the monetary unit and coinage for the new nation was logical and necessary because it helped to unify the colonies and to establish an identity for the new nation that was separate from its European origin. As a result of mercantilism, British coins were always in short supply in the American colonies, as they were sent to Britain as payment for the manufactured goods that had been purchased. As a result of this shortage of coins, many colonists had to resort to barter in order to acquire goods locally. In addition, trade with the West Indies brought Spanish, Portuguese and other European coins into the colonies, which could then be used as payment for goods purchased elsewhere. In the Memorandum

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